Stop Outsourcing: Enforce Trade Agreements

Enforce Open Skies Agreements

Gulf carriers are breaking the rules to take our routes and threaten our jobs. Over $50 billion in subsidies artificially prop up Emirates, Etihad, and Qatar to choke out U.S. competition. Employees and consumers will shoulder the burden of unfair competition unless our government enforces Open Skies agreements with the Gulf states.

Middle East carriers are looking at the lucrative U.S. market to help build their airlines. Their collective goal is to dominate international aviation and they are well on their way. New flights do not represent increased passenger growth. They siphon flyers from U.S. carriers, from the U.S. to India and Asia. Billions in subsidies are what makes that possible; without it they could not compete with U.S. carriers.

For every international long-haul flight lost to the Gulf carriers, economists now estimate over 1,500 American jobs are lost. We have seen this happen at United Airlines, where flight attendants already have lost flights to the Gulf carriers due to these enormous subsidies. United successfully operated the Dulles-Dubai flight for seven years. But on January 25, 2016, the flight ceased to operate, nearly 200 flight attendant bid positions gone with it.

These Gulf carriers have used their subsidies to dump massive amounts of capacity across the globe, causing substantial harm to carriers in Europe, Australia and Asia. Gulf carriers grew capacity at more than six times the growth rate in global GDP between 2001-2016.

More than half of U.S. carriers’ long haul international passengers connect to/from a domestic flight at the U.S. carrier hub. As a result, discontinued/forgone long-haul international service has a negative spillover effect on U.S. carriers’ domestic services, including the potential loss of service to smaller communities.

Even though UAE and Qatar have a combined population comparable to that of South Carolina, they have firm orders for over 500 new widebody aircraft. This is more than twice the number of widebodies on order by the U.S. and Chinese carriers combined.

Everyone understands the rules of fair competition. As an Olympic medalist, if you are found guilty of supplementing your performance with steroids, you must give the medal back. It’s that simple. And you don’t get to retaliate in any fashion or you have to answer to the rest of the Olympic community. Gulf carriers need to play by the rules or be denied further access to the United States.

Trade Policy Run Amok

The U.S. and EU hailed as a breakthrough the labor article negotiated into the core of the U.S.-EU ATA. Article 17 bis is the strongest employee protection ever included in a U.S. air services agreement and was declared by negotiators as a progressive and meaningful provision. Yet now that the first test of that article has come before our government, the U.S. DOT proposes to gut it.

On page six of the April 15, 2016 decision, the DOT writes:

“The Department of State further states that Article 17 bis of that Agreement does not provide a basis upon which a Party may unilaterally deny an air carrier of the other Party a permit to provide services under the Agreement when the carrier is otherwise qualified to receive such a permit.”

In other words – everything matters in these trade agreements except the workers.

This is not the way trade is supposed to work. The U.S.-EU ATA opened the transatlantic market to new service and competition but its framework was based on a commitment to high labor standards and the avoidance of “forum shopping” in order to lower labor standards. The U.S. labor movement is joined by many others in opposing NAI, including unions in Europe and several major U.S. and EU airlines. Also, there has been a broad bipartisan call by Congress for rejection of NAI’s application. Congress has also passed legislation intended to ensure that DOT enforces the terms of Article 17 bis of the ATA.

Norwegian's 'Flag of Convenience' Model Explained

Norwegian Air International (NAI) is a subsidiary of Norway-based Norwegian Air Shuttle. NAI has been seeking a foreign air carrier permit from the U.S. Department of Transportation (DOT) for two years that would allow it to offer new transatlantic airline service under the U.S.-EU Air Transport Agreement (ATA).

NAI’s plan has been to use pilots hired under Singaporean or Thai employment contracts and based in Bangkok. Despite its mature collective bargaining relationships with its own unions in Norway, the company did not intend to use Norwegian crews under existing union contracts. And it blatantly sought to evade Norway’s employment and tax laws by basing its corporate operation in Ireland even though it did not offer service there.

NAI’s employment model is inconsistent with the ATA and specifically, Article 17 bis of the pact, which states that air services under the agreement should not “undermine labor standards or the labor-related rights and principles contained in the Parties’ respective laws.” And, if NAI is allowed to operate to the U.S., that “flag of convenience” model will set the new standard for other airlines to certificate flying in countries with the lowest labor standards, putting tens of thousands of U.S. aviation jobs and the entire U.S. aviation industry at risk.

Aviation Unions Oppose Approval of Flag of Convenience

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Association of Flight Attendants-CWA: “The DOT decision overrides carefully negotiated worker rights and designs a new playbook that rolls out the red carpet for foreign corporations by trampling workers’ rights. Congress must be prepared to act next week. President Obama must reverse this harmful decision and stand up for working people all across the country. We will not accept this. We will act. We will never stop. We will never accept abrogation of our rights.” Read full Release >

Transportation Trades Department, AFL-CIO: “Today’s decision betrays America’s aviation workers by granting a rogue, flag-of-convenience airline a permit to serve the United States. Unless reversed, this decision threatens a generation of U.S. airline jobs and tells foreign airlines that scour the globe for cheap labor and lax employment laws that America is open for business." Read TTD's Full Statement >

Air Line Pilots Association: "We are extremely disappointed by the Department of Transportation’s decision to run roughshod over the U.S. Open Skies agreement and allow Norwegian Air International to fly to and from the United States," said Capt. Tim Canoll, ALPA’s president. "This flawed action is a lasting legacy of the Obama administration and demonstrates an egregious lack of support for working men and women in this country." Read ALPA's Full Statement >

Key Aviation Lawmakers on DOT NAI Decision: “This is a slap in the face to American workers,” said the Members. “Today’s decision by the Department of Transportation to award NAI a foreign air carrier permit is in direct contravention of Article 17 bis of the U.S.-EU Open Skies Agreement, and says to the world that the U.S. will reward countries that break their commitments to protecting workers.” Read the full statement from Members Larsen, LoBiondo, and DeFazio >

Over 100 Members of Congress Urge President-Elect to Protect American Jobs and Security, Reject NAI

“On December 2, 2016, the Department of Transportation (DOT) made a grievously wrong decision to grant Norwegian Air International a foreign air carrier permit for U.S.-Europe air services. Given your commitment to protecting American jobs and our national security, we strongly urge you, on Day One of your presidency, to revoke or suspend the permit until Norwegian changes its business model to a model that does not rely on a flag of convenience and threaten America’s international aviation industry and our national security,” the members wrote. Read the full letter from the Members>

U.S. Senator Bernie Sanders Calls on the President to Stand Up for Good U.S. Aviation Jobs

"Unless DOT’s decision is reversed, it will be an open invitation to other foreign carriers to create flag-of-convenience subsidiaries, threatening the middle class jobs of thousands of flight attendants, mechanics, pilots and other airline workers in our country. We must do everything we can to prevent a global race to the bottom in the airline industry," Sanders wrote. Read the full letter from Sen. Sanders>

AFA International President Sara Nelson sent a letter to Congressional leadership on December 6, 2016 urging immediate action:

"If action is not taken quickly we will be witness to a radical shift in the aviation industry where foreign interests dominate the U.S. marketplace, but keep their money overseas and out of the hands of American workers. American skies must be subject to American safety standards and to the high level of American cockpit and crew standards. Bipartisan legislation already exists with significant support. We are calling on your leadership to take action before it's too late." Read the full letter from President Nelson >

Congressional Support

“This airline is ‘Norwegian’ in name only because it uses a flag of convenience to base crews where labor laws are weak,” said Rep. Peter DeFazio of Oregon, the top Democrat on the Transportation Committee, who called himself “extremely disappointed” with the tentative decision. “Its global outsourcing business model exploits terrible labor, tax and regulatory laws in other countries so it can save a few bucks and undercut competition in the aviation marketplace.”